Are you controlling your most important cost of sale? Why shouldn’t you get the cream?

In the cleaning Industry, our cleaners are not only our biggest asset, but the also represent our biggest cost of sale. Until now, monitoring and controlling this cost of sale has been very difficult. When you look at other labour intensive industries, such as manufacturing, these industries clock staff on & off with biometric readers and scanners and have been doing so for years.

What other costs effect our Payroll?

When we look at our Industry, there are many common costs that we all share. Costs such as Annual Leave, Personal/Carers leave, Qleave, Superannuation, Workcover, Payroll Tax all are added costs on top of every hour our cleaners work. So when we talk about saving money on payroll costs, keep in mind that it’s not just saving money on what you pay your cleaners, but it will also reduce these added taxes.

So let’s break down an Industry Hourly Rate, and have a look at the added expenses to a cleaners wage.

In this example, we are going to use the national award and a Mon-Fri Night rate Cleaner

Rate: $24.41

Annual leaveL 9.04%: $2.21

Personal/Carer’s leave 3.08%: $0.65

Qleave 1.70%: $0.46

Superannuation 9.5%: $2.59

Workcover 3.859%: $2.59

Payroll Tax 4.75%: $1.32

At this point, at a minimum it’s costing us $32.82/hour to have a cleaner working

Now then by the time we add Materials: 2.5%, Equipment 1.5%, Insurance, 1.5%, Admin Overheads 3% and a lovely 10% Margin, we get to $39.05/hr. Now i know, some don’t pay payroll tax, so for you you get another 4.75% in your back pocket.

However, if we look at this breakdown, Labour Related costs, represent 82.5% of our hourly billing.

I know, I know

I can hear you, “Yes, but we charge out at $45/hour” or “but we use Sub-Contractors and don’t have all those costs”

I don’t care even if you charge $50/hr, the LABOUR components still amounts to 65%. My next question, is why do we go on and on about saving money on chemicals, and equipment and paper products. They are less than 5% of our costs, but we just let our cleaners run around getting paid 2 hrs whether they work 2 hrs or not. No other industry would even consider letting their staff come and go as they please and report what ever hours they want. Why are you?

With labour being such a high cost, what savings can be made.

So let’s send Joseph out to clean 3 x 1hr sites, 5 days per week. Now, Joseph used to submit his timesheet each and every week for 15hrs. Which many do, it’s normal. This would cost us 15hrs x $32.82/hr = $492.30

Our data, tells us that most work is completed in 10-15% less time, than scheduled. But we are not going to be that aggressive here. We are simply going to go of the premise that if Joseph completes his work for every shift from anywhere between 53min – 60min, he is going to ROUND UP. We call this the 7 Minute Rule.

So let’s now track Joseph, using a Time and Attendance Platform like freshOps, and see if we can make a saving with the 7 Minute Rule alone.

3 x 53min, 5 days per week = 13.25hrs x $32.82/hr = $434.86

Are you still with me?

So, we saved $57.44! and this is just with Joseph and this is in a week. What about the other 52 weeks of the year and Betty, John, Arif, David, Sam and so on.